Retail

Battle For Pet Retail Dominance Gains Fresh Fuel

Walmart is the latest example of the power of pets in retail — a power that is having significant influence among various merchants competing for the loyalty and dollars of pet owners. As well, if done well, pet retail can serve to increase foot traffic into bricks-and-mortar stores at a time when it is dearly needed.

In case you missed the breaking news earlier Tuesday (May 7), here you go: To bring in more of the consumers who pay billions of dollars a year on their pets, Walmart is rolling out an online pet pharmacy and opening additional veterinary clinics. The retailer plans to bring its number of clinics to 100 from the current 21 in operation, CNBC reported.

Walmart will kick off the expansion with new clinics in the Dallas-Fort Worth area. Pets can get care for minor illnesses along with vaccines and routine exams. In addition, Walmart will roll out a WalmartPetRX.com eCommerce pet pharmacy with prescriptions for cats, dogs, horses and livestock. Chewy.com already has an online pharmacy business.

The idea of offering wellness and minor medical care inside stores to increase foot traffic and brick-and-mortar sales is not limited to pets, of course. Human care clinics are a common and growing part of the U.S. physical retail landscape.

Pet Product Growth

But wellness is only part of the battle over pets — indeed, the number of cat and dog healthcare products on Walmart’s website has risen by approximately 60 percent during the past year. Amazon also has its Wag pet food brand, and Target has teamed with BarkBox to offer chew toys and treats online and in-store.

That battle over pets retail in a very large sense part pits Walmart against Amazon, a contest that has been going on for years and involves multiple areas, as documented by PYMNTS research for the ongoing Walmart Amazon Whole Paycheck series.

In a report from March, that PYMNTS research found Amazon managed over $1 billion in pet food sales in 2018, a 20 percent year-on-year increase from 2017. The same study found the pet food and supplies category accounted for more than half of all pet supply sales on Amazon in the U.S., bringing in an estimated $365 million in the third quarter of 2018 — nearly six times the size of the next largest category in pet products.

Amazon is, however, so far somewhat less successful at selling its own branded dog food, Wag. Pete Andrews, director of insights at Edge by Ascential, which did the study, said Wag brought in $2 billion in sales, a “negligible share in the current pet food category.”

But, he noted, Amazon does seem to be testing at least one other private-label dog food, which means it might not be a major challenger in the segment yet, but is clearly gathering data to become one.

Neither Amazon nor Walmart, as big as they are, have the luxury of merely competing between themselves for the dollars of pet owners. In fact, a battle between two big pet stores pits an omnichannel focus against a push to make physical stores more robust.

Stores Duke it Out

Back in 2017, PetSmart boosted its digital offerings through the $3.35 billion acquisition of Chewy, the leading online retailer of pet food and products. Now, according to various reports, PetSmart is having problems paying its debts as growth has slowed. Meanwhile, according to The Wall Street Journal, “Petco Animal Supplies Inc., which is dedicating more of its stores to grooming and other services customers can’t get online, said it returned to growth in late 2018 after a stretch of declines.”

The competition between those two retailers comes as U.S. consumers spend “an estimated $70 billion on pet food, supplies, veterinary care and other services, compared with about $40 billion a decade ago, according to the American Pet Products Association,” the report said.

PetSmart sees Chewy as a way to acquire new customers, according to comments made by a company executive to the newspaper. Petco, meanwhile, “struggled for years from declining foot traffic as online competitors grabbed more sales and food manufacturers broadened distribution. The company has recently expanded its veterinary services and improved its training classes and grooming facilities to encourage customers to make more trips to its stores.”

As PetSmart and Petco battle for consumer loyalty and spend, startups in that part of the retail industry are striving for market share via other methods. That includes subscription eCommerce.

One example is the Internet of Things (IoT)-based pet subscription service PupPod. In a PYMNTS interview, PupPod CEO Erick Eidus talked about how when he looked at all the products on the market for dogs, such as plush toys, he noted that none of them truly captured a dog’s intelligence, which inspired him to start thinking about building technology products for animals. With his experience designing early smartphone products, it became clear to Eidus that there would be a product category of IoT-connected devices for animals. “They just need to be designed from a dog’s perspective,” he said.

Walmart is showing that pet retail offers significant commerce potential, though it remains uncertain how well its new push in this area will do for foot traffic inside its stores. Still, it’s reasonable to expect further developments before too long, given all the money that U.S. consumers spend on their dogs, cats and other domesticated creatures.

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